By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A TRADE union leader yesterday joined employers in urging the Government to reveal the magnitude of the National Insurance Board (NB) rate increase “ASAP”, adding: “July is just around the corner.”

Obie Ferguson KC, the Trades Union Congress (TUC) president, told Tribune Business it is impossible “to have an intelligent discussion” on how the contribution rate rise set to take effect on July will impact working Bahamians, their families and take home pay if all the essential details have not been revealed.

Finding himself on the same side as employers, he said: “I think it’s important for us to know because the TUC is made up of 40 unions in the country, and those unions now have to convey that message.. As a matter of fact, they need to have a meeting and discussions on it to see how best it can be introduced.

“It’s adding a cost on the workers of the country and employers have an issue as well. It’s important that these types of thing be done in a collaborative manner with all the players. It just cannot be the Government doing this by themselves. You have the workers, you have the employers and you have the Government.

“It’s advisable that information be made available ASAP [as soon as possible] so the parties can contact their individual constituencies and go from there,” Mr Ferguson added. “We have to know. We cannot plan for something that we don’t know. It will have an effect on some people more than others.”

Mr Ferguson argued that the Government should allow time for unions and employer groups alike to consult their members by making the magnitude of the July 1 increase known, and then for all the parties to come together in a meeting with itself.

“We have to know what the increase will be so we can have an intelligent discussion with our membership and the Bahamian public, and with the employers,” the TUC chief said. “They need to know as well. I think there needs to be a collaborative effort among all the players, and we should have some meetings to that effect and come up with something that makes sense.

“We need to get going on it because July is right around the corner. It’s best for us to do it early and find some accommodation as to how we go about it... There’s a tendency for the Government to function as if they’re the only player in the exercise. That is not so. We need to have the three parties involved. We’ll all be looking out for it.”

Prime Minister Philip Davis KC last June confirmed that a National Insurance Board (NIB) contribution rate increase will be implemented on July 1, 2024, but provided no further details in his statement other than the date while asserting that the further year’s delay will not make the magnitude of the hike any greater.

“We hope that a full year’s advance notice will allow all impacted the time to plan to accommodate the increase,” Mr Davis said. However, the Government has yet to reveal the magnitude of the increase, and how it is to be split between employer and employee - possibly because Cabinet has yet to meet, agree on and approve it.

Mr Ferguson yesterday pointed out that any increase to the worker’s portion of the contribution rate, which is presently 3.9 percent, would be especially impactful for Bahamians earning minimum wage salaries despite last year’s increase to $260 per week. And it could also force some families to cut back and adjust their spending budgets at a time when the post-COVID cost of living crisis continues to linger on.

The TUC chief’s views are also aligned with those of employers. Peter Goudie, the Bahamas Chamber of Commerce and Employer’s Confederation’s (BCCEC) labour division head, told Tribune Business that the July 1 contribution rate rise is now less than six months away and much closer than what he believes should be reasonable notice to allow companies to budget and plan properly.

“They should be giving notice at a minimum of six months” he argued.

“People have got to plan on this stuff. How can you budget? That’s a very difficult situation. They need to tell people. I don’t know what the secret is. I don’t know why they’re making it a secret and why they’re not telling people.

“I don’t know why they wouldn’t. They have all the actuarial figures. They know what the problem is and how much they’re going to raise it. I don’t know why they’re making it a secret. That’s all I can say. I just don’t know why. I really don’t.”

Mark A Turnquest, the 242 Small Business Association and Resource Centre’s (SBARC) founder, said his members are preparing for the impending NIB rate increase but have also been awaiting confirmation on exactly how much it will be so that they can factor that into their budgets.

“They are preparing themselves because they know it is inevitable, but all they want to know is the exact rake hike. All of my clients and members are ready for it but they want to know exactly how much it will be so that they can be prepared,” he added.

“What they wanted to know from last year is to find out exactly what it was so they could put that in their planning budget for 2024. They are aware that it’s going up but since they don’t know exactly much they’re making estimates.”

NIB’s present reality was predicted more than two decades by its seventh actuarial review, completed in 2001, which forecast that “reserves are projected to become exhausted” by 2029 if comprehensive reforms are not implemented to address the fundamental problem of benefit payouts exceeding contribution income. The recipient of that review, which was only one year out, on September 11, 2002, was then-NIB chairman and now-Prime Minister, Philip Davis QC.

Now, with just four years left to the NIB Fund’s total depletion in 2028, the magnitude of the correction threatens to be that much more severe for businesses and workers already grappling with surging inflation, COVID recovery, rising gas prices and other cost increases. Contributions are presently split 5.9 percent/3.9 percent between employer and employee, making for a combined 9.8 percent, but there has been no indication on what the actual increase will be.

NIB’s 11th actuarial report called for a two percentage point increase in contribution rates to be implemented by July 1, 2022, with subsequent further hikes enacted every two years until 2036 to secure the social security system’s long-term financial sustainability. The date given by the Prime Minister means that the Government will ultimately end up pushing this back two years.

Other NIB reform options include raising the “official” retirement age, increasing the contributions required to become eligible for benefits, and further insurable wage ceiling increases.